Chancellor Rishi Sunak has outlined further details of the extension of the Coronavirus Job Retention Scheme (CJRS) and how it will work.
They include improved flexibility to bring furloughed employees back part time in July and a new taper requiring employers to contribute to furloughed salaries from August.
From July 1 businesses will be given the flexibility to bring furloughed employees back part-time.
Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them – and will be responsible for paying their wages while in work.
From August the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work.
That means that for June and July the government will continue to pay 80 per cent of people’s salaries.
In the following months, businesses will be asked to contribute “a modest share”, but crucially individuals will continue to receive that 80 per cent of salary covering the time they are unable to work.
The scheme updates mean that the following will apply for the period people are furloughed:
• June and July: The government will pay 80 per cent of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything
• August: The government will pay 80 per cent of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents five per cent of the gross employment costs the employer would have incurred had the employee not been furloughed
• September: The government will pay 70 per cent of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10 per cent of wages to make up 80 per cent total, up to a cap of £2,500. For the average claim, this represents 14 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed
• October: The government will pay 60 per cent of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20 per cent of wages to make up 80 per cent total up to a cap of £2,500. For the average claim, this represents 23 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed
Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.
Around 40 per cent of employers have not made a claim for employer NICs costs or employer pension contributions and so will be unaffected by the change in August if their employee’s employment patterns do not change.
Many smaller employers have some or all of their employer NIC bills covered by the Employment Allowance so will not be significantly impacted.
Around 25 per cent of CJRS monthly claims are below the thresholds where employer NICs and automatic enrolment pension contributions are due, and so no employer contribution would be expected for these payments to furloughed employees in August.
The government says that to enable the introduction of part time furloughing, and support those already furloughed back to work, claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees.
The scheme will close to new entrants on June 30, with the last three-week furloughs before that point commencing on June 10.
From July 1 employers will be able to agree any working arrangements with previously furloughed employees.
When claiming the CJRS grant for furloughed hours; employers will need to report and claim for a minimum period of a week, for grants to be calculated accurately across working patterns.
Announcing the changes, Mr Sunik said: “Our top priority has always been to support people, protect jobs and businesses through this crisis. The furlough and self-employment schemes have been a lifeline for millions of people and businesses.
“Now, as we begin to re-open our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world.”